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Sorting and Long-Run Inequality

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  • Raquel Fernandez
  • Richard Rogerson

Abstract

Many social commentators have raised concerns over the possibility that increased sorting in a society can lead to greater inequality. To investigate this we construct a dynamic model of intergenerational education acquisition, fertility, and marital sorting and parameterize the steady state to match several basic empirical findings. Contrary to Kremer's (1997) finding of a basically insignificant effect of marital sorting on inequality, we find that increased marital sorting will significantly increase income inequality. Three factors are central to our findings: a negative correlation between fertility and education, a decreasing marginal effect of parental education on children's years of education, and wages that are sensitive to the relative supply of skilled workers.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7508.

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Date of creation: Jan 2000
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Publication status: published as Fernandez, Raquel and Richard Rogerson. "Sorting And Long-Run Inequality," Quarterly Journal of Economics, 2001, v116(4,Nov), 1305-1341.
Handle: RePEc:nbr:nberwo:7508

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  1. Jeremy Greenwood & Nezih Guner & and John Knowles, 1999. "More on marriage, fertility, and the distribution of income," Working Paper 9904, Federal Reserve Bank of Cleveland.
  2. Dahan, Momi & Tsiddon, Daniel, 1998. " Demographic Transition, Income Distribution, and Economic Growth," Journal of Economic Growth, Springer, vol. 3(1), pages 29-52, March.
  3. Fernandez, Raquel & Rogerson, Richard, 1998. "Public Education and Income Distribution: A Dynamic Quantitative Evaluation of Education-Finance Reform," American Economic Review, American Economic Association, vol. 88(4), pages 813-33, September.
  4. Bénabou, Roland, 1993. "Heterogeneity, Stratification and Growth," CEPR Discussion Papers 815, C.E.P.R. Discussion Papers.
  5. Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation," Harvard Institute of Economic Research Working Papers 1777, Harvard - Institute of Economic Research.
  6. Michael Kremer, 1996. "How Much Does Sorting Increase Inequality?," NBER Working Papers 5566, National Bureau of Economic Research, Inc.
  7. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-98, April.
  8. Jere R. Behrman & Alejandro Gaviria & Miguel Székely, 2001. "Intergenerational Mobility in Latin America," Research Department Publications 4267, Inter-American Development Bank, Research Department.
  9. Behrman, Jere R & Pollak, Robert A & Taubman, Paul, 1989. "Family Resources, Family Size, and Access to Financing for College Education," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 398-419, April.
  10. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
  11. Cooper, Suzanne J, 1998. " A Positive Theory of Income Redistribution," Journal of Economic Growth, Springer, vol. 3(2), pages 171-95, June.
  12. Fernandez, Raquel & Rogerson, Richard, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 135-64, February.
  13. Raquel Fernandez & Jordi Gali, 1997. "To Each According To...? Markets, Tournaments, and the Matching Problem with Borrowing Constraints," NBER Working Papers 5930, National Bureau of Economic Research, Inc.
  14. Kremer, M & Maskin, E, 1996. "Wage Inequality and Segregation by Skill," Working papers 96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
  15. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
  16. Burdett, Ken & Coles, Melvyn G, 1997. "Marriage and Class," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 141-68, February.
  17. Ljungqvist, Lars, 1993. "Economic underdevelopment : The case of a missing market for human capital," Journal of Development Economics, Elsevier, vol. 40(2), pages 219-239, April.
  18. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
  19. Daniel Chen & Michael Kremer, 1999. "Income-Distribution Dynamics with Endogenous Fertility," American Economic Review, American Economic Association, vol. 89(2), pages 155-160, May.
  20. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
  21. Raquel Fernandez & Richard Rogerson, 1997. "Education finance reform: A dynamic perspective," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(1), pages 67-84.
  22. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
  23. Dahan, Momi & Gaviria, Alejandro, 2001. "Sibling Correlations and Intergenerational Mobility in Latin America," Economic Development and Cultural Change, University of Chicago Press, vol. 49(3), pages 537-54, April.
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  1. No, Online Dating Is Not Increasing Income Inequality
    by Rob Wile in Business Insider on 2013-10-22 16:32:00
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